SSR 72-6: SECTION 211(a). -- SELF-EMPLOYMENT -- MINISTERS -- RENTAL VALUE OF PARSONAGE TO BE INCLUDED IN COMPUTING NET EARNINGS FROM SELF-EMPLOYMENT

SSR 72-6

Where the deed to a parsonage furnished a self-employed minister is in his name "and successors in office," held, such minister is required, under section 211(a)(7) of the Social Security Act (42 U.S.C. 411(a)(7)), to include the rental value of the parsonage in computing his net earnings from self-employment.

Advice has been requested whether section 211(a)(7) of the Social Security Act (42 U.S.C. 411(a)(7)) requires a self-employed minister to include in his net earnings from self-employment the rental value of the parsonage furnished him where the deed to the property is in his name "and successors in office."

Section 211(a) of the Social Security Act states that --

The term "net earnings from self-employment" means the gross income, as computed under Subtitle A of the Internal Revenue Code of 1954, derived by an individual from any trade or business carried on by such individual, less the deductions allowed under such subtitle which are attributable to such trade or business, . . .; except that in computing such gross income . . .

(7) An individual who is a duly ordained, commissioned, or licensed minister of a church or a member of a religious order shall compute his net earnings from self-employment derived from the performance of service described in subsection (c)(4) without regard to section 107 (relating to rental value of parsonages) . . .

Section 211(a)(7) of the Act has been implemented by Section 404.1061(a) of Regulations No. 4 of the Social Security Administration (20 CFR 404.1061(a)), which provides:

. . . For each taxable year ending on or after December 31, 1957, such minister or member of a religious order shall compute his net earnings from self-employment derived from the performance of such service without regard to the exclusions from gross income provided by section 107 of the Internal Revenue Code of 1954 (relating to rental value of parsonages) . . . Thus, a minister, engaged in a trade or business within the meaning of section 211(c) of the Act, will include in the computation of his net earnings from self-employment for a taxable year ending on or after December 31, 1957, the rental value of a home furnished to him as remuneration for services performed in the exercise of his ministry or the rental allowance paid to him as remuneration for such services irrespective of whether such rental value or rental allowance is excluded from gross income by section 107 of the Internal Revenue Code of 1954. . . .

Thus, the Social Security Act and the Regulations both contemplate that the rental value of any property a minister is furnished as a parsonage, or the rental allowance granted him, will be included in the computation of his net earnings from self-employment. There is no distinction as to whether he occupies the property used as a parsonage as a "tenant" or as the holder of a "deed" to the property. In this case, the self-employed minister had only a "tenancy" for the tenure of his office. Accordingly, it is held that pursuant to section 211(a)(7) of the Social Security Act the self-employed minister is required to include the rental value of the parsonage in computing his net earnings from self-employment.

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